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[2 points] You estimate that the free cash flows of a firm will be $10 million, $15million, $20 million and $22million over the next four

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[2 points] You estimate that the free cash flows of a firm will be $10 million, $15million, $20 million and $22million over the next four years. You estimate (properly) that the cash flows will grow at 5% thereafter and you are comfortable with the steady-state year free cash flow). You have calculated the cost of equity capital = 15.5% and the pre-tax cost of debt capital = 7%. The average tax rate is 20%, and the marginal tax rate is 40%. The firm is currently operating with a D/E ratio of 1.0, and the target D/E ratio is 0.60. Calculate the value of the firm. A) $290.68 million B) $386.92 million C) $264.86 million

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